Navigating the New Medicare Drug Plan

Because you're reading this column at TheStreet.com, odds are you haven't given Medicare a thought. But if you don't want to end up paying some very expensive prescription drug bills for your mom or dad (or even grandma), you should encourage them to sign up for the new Medicare prescription drug benefit -- even if they aren't taking any pills right now.

Medicare Part D, as it's called, is an exercise in governmental complexity that far outranks the Alternative Minimum Tax and the Earned Income Credit combined! The government put together a plan that involves a monthly payment, a deductible, co-payments, a "doughnut hole" during which no benefits are paid, and "catastrophic" coverage that will cover most costs for seniors who must regularly take very expensive prescriptions.

Don't try to figure it out! It has taken me weeks to condense that description. Fortunately, Medicare Part D is a government plan design; it's being implemented and offered by private insurance companies on a competitive basis. They're spending a lot of money to convince your parents that they have the best plan. The result is a pile of confusing booklets and ads directed at seniors.

Here's your opportunity to repay Mom and Dad for that college education by helping them through the process of choosing a Part D plan. Believe me, the process will make very good use of all your online skills!

Don't procrastinate. Signup starts Nov. 15. The plans go into effect on Jan. 1. But if seniors delay signing up after May 15, 2006, it could be very costly. Even if your parents are healthy, don't take pills, and currently have plenty of money, they need to sign up for a plan. Here's what you need to know to help them:

Who should sign up?

All seniors age 65 and older who are eligible for Medicare should sign up for the new prescription drug insurance program (with a few exceptions noted below) -- even if they are not currently taking prescription medications. You never know when drug costs will arise.